If your business has an aggregate annual turnover exceeding ₹5 crore in any previous financial year, e-invoicing is mandatory for you under GST law. Getting it wrong — or skipping it — means your buyer cannot claim Input Tax Credit (ITC), and you face a penalty of ₹10,000 per invoice or 100% of the tax, whichever is higher.
This guide explains exactly what e-invoicing is, who must comply, how the process works step by step, what the cancellation rules are, and how LekhaBooks automates the entire workflow so you get an IRN in under 2 seconds.
Table of Contents
- What is e-invoice?
- Turnover threshold & history
- Who must generate e-invoices?
- IRP portals: which one to use?
- Step-by-step e-invoice generation
- IRN: what it contains
- Cancellation rules (24-hour window)
- Penalties for non-compliance
- Time limit: 30-day rule (April 2025)
- How LekhaBooks handles e-invoicing
- FAQs
1. What is e-Invoice?
E-invoice (electronic invoice) is not a different format of invoice. It is the standard GST tax invoice that a business issues, but which is then reported to a government portal — the Invoice Registration Portal (IRP) — to receive a unique identifier called the Invoice Reference Number (IRN).
Along with the IRN, the IRP returns a digitally-signed QR code that must be printed on the physical or PDF invoice given to the buyer. The QR code contains all key invoice details in a tamper-proof, verifiable format.
Think of it this way: your invoice creation process does not change. You still raise invoices as usual in your accounting software. What changes is that before the invoice is handed to the buyer, it must be registered on the government portal and must carry the IRN and QR code.
Key point: An invoice without a valid IRN is not treated as a valid GST invoice. The buyer cannot claim ITC on it.
2. Current Turnover Threshold and History
The government has been progressively lowering the e-invoice turnover threshold, bringing more and more businesses under the mandate. Here is the complete history:
| Effective Date | Turnover Threshold | Businesses Covered |
|---|---|---|
| January 2020 (pilot) | ₹500 crore+ | Large corporates only |
| February 2020 | ₹100 crore+ | Expanded pilot |
| April 1, 2021 | ₹50 crore+ | Mid-large businesses |
| April 1, 2022 | ₹20 crore+ | Medium businesses |
| October 1, 2022 | ₹10 crore+ | Smaller large businesses |
| August 1, 2023 | ₹5 crore+ | Current mandatory threshold |
The threshold is based on Aggregate Annual Turnover (AATO) in any previous financial year — not the current year. So if your turnover crossed ₹5 crore even once in any prior year, you are covered, even if your current year turnover is lower.
Industry bodies have been discussing a further reduction to ₹2 crore. Businesses approaching that mark should prepare their systems in advance.
3. Who Must Generate E-Invoices?
E-invoicing is mandatory for the following document types issued by businesses above the ₹5 crore threshold:
- B2B invoices — invoices to GST-registered businesses
- Debit notes — issued to registered buyers
- Credit notes — issued to registered buyers
- Export invoices (with payment of IGST)
- Supplies to SEZ units (with or without payment of tax)
E-invoicing is NOT required for:
| Document / Transaction Type | Reason Excluded |
|---|---|
| B2C invoices (to unregistered buyers) | No GSTIN of buyer to register |
| Nil-rated or exempt supplies | No GST involved |
| Non-taxable supplies | Outside GST scope |
| Imports (purchase invoices from foreign vendors) | Supplier is foreign, cannot register on IRP |
| Delivery challans | Not a tax invoice |
| Financial credit notes (no GST adjustment) | Not a GST document |
| Banks, NBFCs, insurance companies | Specifically exempted by government notification |
| SEZ developers | Exempted by notification |
4. IRP Portals: Which One to Use?
The government has authorised multiple Invoice Registration Portals (IRPs). You can use any of them — they all generate the same IRN and QR code, and all are officially recognised by GSTN.
| IRP Name | Portal URL | Operated by |
|---|---|---|
| NIC IRP 1 | einvoice1.gst.gov.in | NIC (Government) |
| GSTN IRP 2 | einvoice2.gst.gov.in | GSTN (Government) |
| Cygnet IRP 3 | einvoice3.gst.gov.in | Cygnet Infotech (Private) |
| Clear IRP 4 | einvoice4.gst.gov.in | nameClearTax (Private) |
| Masters India IRP 5 | einvoice5.gst.gov.in | Masters India (Private) |
| IRIS IRP 6 | einvoice6.gst.gov.in | IRIS Business (Private) |
When you use accounting software like LekhaBooks, you do not need to visit these portals at all. Your software connects to the IRP via API and handles the entire process automatically when you save an invoice.
5. Step-by-Step E-Invoice Generation Process
Here is exactly how e-invoice generation works, from creating the invoice to printing it:
Enter all invoice details in LekhaBooks — buyer GSTIN, item details, HSN codes, tax rates, amounts. Nothing changes in your invoice creation workflow.
The software formats the invoice data into the government-prescribed JSON schema (FORM GST INV-01) automatically. You do not need to do anything manually.
The software sends the JSON to the IRP in real time. This happens the moment you click Save/Generate on your invoice.
The IRP checks that the supplier GSTIN is valid and active, the invoice number has not been used before in the same financial year, and the document type is valid.
On successful validation, the IRP computes a SHA-256 hash (the IRN), digitally signs the invoice, embeds a QR code, and returns the signed JSON to your software within seconds.
LekhaBooks automatically embeds the IRN and QR code on your invoice PDF. You can immediately share it with the buyer via email or WhatsApp, or print it. The entire process from Step 1 to this step takes under 2 seconds when automated.
Additionally, the IRP automatically pushes the invoice data to the GSTR-1 system (the invoice appears in the buyer's GSTR-2B) and also to the e-way bill platform — eliminating duplicate data entry.
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Try free for 14 days →6. IRN: What It Contains and Why It Cannot Be Repeated
The IRN (Invoice Reference Number) is a 64-character alphanumeric string. It is not a sequential number assigned by the government — it is a cryptographic hash computed from four key parameters:
- Supplier GSTIN
- Invoice / document number
- Financial year (e.g., 2025-26)
- Document type (INV = Invoice, CRN = Credit Note, DBN = Debit Note)
Because the hash is derived from these four parameters, the same combination can never produce a different IRN — and the same IRN can never be generated again. If you try to upload an invoice with the same invoice number and financial year, the IRP will reject it as a duplicate.
This design ensures that every invoice in the GST ecosystem is unique and traceable, preventing fake invoices and inflated ITC claims.
7. Cancellation Rules: The 24-Hour Window
Once an IRN is generated, you may need to cancel it if you made an error in the invoice (wrong GSTIN, wrong amount, wrong item, etc.). The cancellation rules are strict:
| Scenario | What You Can Do |
|---|---|
| Error noticed within 24 hours of IRN generation | Cancel the IRN on the IRP portal and issue a fresh correct invoice |
| Error noticed after 24 hours | Cannot cancel on IRP. Must issue a Credit Note to reverse the original invoice, then issue a fresh invoice |
| E-way bill already generated on the IRN | Cancel the e-way bill first, then cancel the IRN (within 24 hours) |
Important: A cancelled IRN cannot be used again. You must generate a new invoice with a new invoice number to get a fresh IRN. Also, partial cancellation is not allowed — you must cancel the entire document.
8. Penalties for Non-Compliance
Failure to generate e-invoices when mandatory has serious financial and compliance consequences:
- Invoice validity: An invoice without an IRN is not a valid GST tax invoice under law (Rule 48 of CGST Rules, 2017).
- Buyer's ITC blocked: Since the invoice is not valid, the buyer cannot claim ITC on it. This effectively makes your buyer pay GST out of pocket — damaging your business relationship.
- Penalty under Section 122 of CGST Act: ₹10,000 per invoice or 100% of the tax amount, whichever is higher.
- Audit and scrutiny risk: If a significant portion of your B2B invoices lack IRNs, it triggers GST audit and potential demand notices.
9. Time Limit for Reporting: The 30-Day Rule (April 2025)
From April 1, 2025, businesses with aggregate annual turnover of ₹10 crore or more cannot generate an IRN for any document (invoice, credit note, or debit note) that is more than 30 days old from its date of issue.
For example: if your invoice is dated April 1, 2025, you must generate the IRN by April 30, 2025 at the latest. An attempt to generate the IRN on May 1, 2025 will be rejected by the IRP.
For businesses between ₹5 crore and ₹10 crore, the 30-day restriction does not yet apply, but the general rule remains: e-invoices should be generated at or before the time of supply.
Note: Invoices rejected by the IRP due to the 30-day rule are treated as non-compliant. There is no provision for a late-generation grace period.
10. How LekhaBooks Handles E-Invoicing Automatically
LekhaBooks is built for Indian GST compliance. When you generate an invoice in LekhaBooks, the e-invoicing workflow is completely automated:
- Auto-detection: LekhaBooks checks whether the invoice requires e-invoicing (B2B, registered buyer, taxable supply) and auto-sends it to the IRP.
- Real-time IRN: The IRN is received and stored within 2 seconds of saving the invoice.
- QR code on PDF: The invoice PDF automatically includes the digitally-signed QR code and IRN in the correct format.
- Error handling: If the IRP rejects the invoice (e.g., invalid GSTIN, duplicate invoice number), LekhaBooks shows you a clear error message with the reason so you can fix and re-submit.
- Bulk generation: Need to generate IRNs for many past invoices? LekhaBooks supports bulk e-invoice generation.
- Cancellation flow: Cancel an e-invoice from within LekhaBooks — the software sends the cancellation request to the IRP and updates the invoice status automatically.
- 30-day alert: LekhaBooks flags invoices approaching the 30-day reporting deadline so you never miss the window.
Frequently Asked Questions
Is e-invoice mandatory for turnover of ₹5 crore?
Yes. From August 1, 2023, e-invoicing is mandatory for all GST-registered businesses whose aggregate annual turnover (AATO) exceeds ₹5 crore in any previous financial year. Businesses with turnover between ₹5 crore and ₹10 crore are also covered under this threshold.
What is IRN in e-invoice?
IRN (Invoice Reference Number) is a unique 64-character hash generated by the IRP for every e-invoice. It is computed using a SHA-256 hash of the supplier GSTIN + invoice number + financial year + document type. No two invoices can have the same IRN.
Can e-invoice be cancelled after 24 hours?
No. E-invoices can only be cancelled on the IRP within 24 hours of generation. After 24 hours, cancellation on the IRP is not possible. To correct an e-invoice after the 24-hour window, the supplier must issue a credit note against the original invoice.
What is the penalty for not generating e-invoice?
An invoice without a valid IRN is not considered a valid GST invoice. The buyer cannot claim ITC on such an invoice. The penalty for non-generation of e-invoice is ₹10,000 per invoice, or 100% of the tax amount, whichever is higher, under Section 122 of the CGST Act.
What is the time limit to generate e-invoice?
E-invoices must be reported to the IRP on or before the date of supply. From April 1, 2025, businesses with turnover of ₹10 crore or more cannot generate an IRN for any document older than 30 days from its date of issue. Invoices older than 30 days will be rejected by the IRP.